February 3, 2006

Amazon.com is the most-closely watched eCommerce company on Wall Street. Yesterday, even though its earnings beat analysts' consensus estimates, it still failed to impress most stock analysts.

Amazon's revenue of just under $3 billion fell about $100 million short of what many had expected.

These news and an after-hours drop in shares obscured a crucial milestone: Amazon, for the first time, sold more than $1 billion worth of books, music, and video in North America in the fourth quarter, an increase of 16 percent over the year-earlier period.

But the sheer scale of Amazon's media sales make it tough to maintain double-digit percentage growth rates. And the experience of shopping online still isn't the same as picking up a book at the local bookstore.

Jeff Bezos has a plan, however. If you read between the lines of the Web site's seemingly unfocused forays into blogs, video, and e-books, you'll actually see that he's doubling down on selling books, CDs, and DVDs -- the mainstay of his media sales.

And how does Bezos plan to sell media? With yet more media. On Wednesday, Amazon.com announced a blog feature on its Web site for published authors to communicate directly to fans on the Amazon.com homepage and on the pages where Amazon lists their books. Nelson DeMille and James Patterson are among the participating writers.

This move, while technically simple, lets Amazon recreate something long missing from the online experience—a way to connect authors and readers the way physical bookstores do through readings and signings. It also cuts out the media middlemen -- newspapers, magazines, and other book reviewers -- encouraging readers to come directly to Amazon's Web site to keep up with their favored authors.

Likewise, Amazon has started streaming an original Internet video show, "Amazon Fishbowl with Bill Maher," hosted by the well-known comedian and featuring performances and interviews with musicians, authors, directors, and actors. They'll be promoting their latest books, movies, and CDs, of course -- with Amazon providing links to buy the goods.

The company is also working on programs with publishers, first announced last November, to allow shoppers to buy both a hardcopy book and a digital version at the same time, or buy only pages or sections of a book in digital form. Amazon hasn't said when those digital books will be available.

It's doubtful these new features will deliver an immediate boost to earnings. But together, they suggest that Jeff Bezos is paying attention again to its core media business, and trying to figure out new ways to sell media online. When Wall Street expects growth, standing still is not an option.

Source: CNN Money

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